The IRDAI has drafted guidelines for a comprehensive insurance fraud monitoring framework for the insurance sector to identify, assess, and mitigate fraud risks effectively across the insurance industry.
This follows a review of the Insurance Fraud Monitoring Framework released in January 2013 to provide regulatory supervision and guidance on the adequacy of measures taken by insurers to address and manage risks emanating from fraud.
However, given the substantial change in the nature and intensity of fraud over the years since, the IRDAI reviewed the Framework and issued the Insurance Fraud Monitoring Framework Guidelines, 2024.
Drawing insights from practices followed by other financial sector regulators and international best practices in this domain, the draft provides an enhanced framework that includes advanced measures for fraud detection, efficient fraud handling, robust fraud prevention, and other relevant aspects.
Among several major points raised in the draft guidelines is the crucial role of data analytics in anti-fraud work. To ensure that the data available with insurers are effectively utilised to prevent fraud in the insurance sector, the draft proposes an appropriate Fraud Monitoring Technological Framework cutting across all lines of insurance business at the Insurance Information Bureau (IIB) be utilised. As insurers are both data providers to IIB and beneficiaries of the aforementioned framework, all insurers shall participate in IIB’s fraud monitoring mechanism to help the industry combat fraud and protect policyholders and all stakeholders.
The common platform at IIB containing the industry-wide database on suspected and reported fraudulent activities within the insurance industry shall facilitate timely threat intelligence sharing across the insurance sector. For the platform to be effective, a suitable mechanism for identifying policyholders irrespective of the insurer, such as a unique identifier, shall be adopted.
IIB shall maintain a caution repository concerning blacklisted agents, distribution channels, hospitals, TPAs, etc to safeguard the integrity of the insurance market by preventing the involvement of those with a record of fraudulent activities.
The draft guidelines on the revised insurance fraud monitoring framework are placed for feedback from stakeholders and the public which are to be submitted by 13 November.